Ex-Roadrunner CFO charged in fraud scheme involving US$245m
THE former chief financial officer of Roadrunner Transportation Systems, Peter R Armbruster, has been charged for his alleged role in a securities and accounting fraud scheme that resulted in a loss of more than US$245 million in shareholder value, the US Justice Department said
THE former chief financial officer of Roadrunner Transportation Systems, Peter R Armbruster, has been charged for his alleged role in a securities and accounting fraud scheme that resulted in a loss of more than US$245 million in shareholder value, the US Justice Department said.
The indictment, which was unsealed in a Wisconsin district court, also included additional charges against former Roadrunner executives Mark R Wogsland and Bret S Naggs. Both men initially were indicted in this case in June.
Both Mr Wogsland and Mr Naggs are former controllers for Roadrunner's truckload operating segment, while Mr Wogsland also served as director of accounting for the business unit.
The charges against the three men include one count of conspiracy to make false statements to a public company's accountant and falsify Roadrunner's books, records and accounts, as well as two counts for false entries, two counts of securities fraud and two counts of wire fraud. Separate charges of fraud also were lodged against the former Roadrunner executives.
Mr Armbruster has been released on bond.
Starting as early as 2014, the three formers Roadrunner executive and their co-conspirators allegedly concealed millions of dollars in mis-stated accounts, including uncollectible debts and receivables and assets with little to no value, the Justice Department said, reports American Shipper.
Federal investigators found that the three men in 2015 planned to write off the illicit accounts but failed to do so for most of them. These mis-stated accounts remained on Roadrunner's balance sheet until they resurfaced more than two years later after they had grown to between $25 million and $50 million, while Mr Armbruster certified that Roadrunner's financial statements were accurate.
In addition to concealing the mis-stated accounts, the Justice Department said the men used a practice known as 'cushion accounting', in which they selectively reduced liability accounts in order to create a 'cushion' of funds that the conspirators used to fraudulently inflate Roadrunner's financial performance in later quarters.
The latest indictment also alleges that, as part of the scheme, the trio delayed recognising expenses, including accruals for annual bonuses and expenses for bad debt, and mis-stated accounts to fraudulently inflate Roadrunner's financial performance and further misled Roadrunner's shareholders, independent auditors, lenders, regulators and the investing public about the company's financial condition, the Justice Department said.